News & what's on - Written by on Thursday, March 8, 2012 1:31 - 0 Comments

SFO using S. 2 Notice powers to obtain evidence for Bribery Act suspicions: What to do if you get one.

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Recently the Director said this about Bribery Act cases the SFO has identified and is investigating:

“There are some cases that we have identified ourselves where we are using our statutory powers to obtain evidence for the investigation.  We shall see how these cases develop, but I shall be very surprised if we do not get some good cases out of this.”

We reported on it here but if you blinked you may have missed it.

It is significant.

There are some who will not be satisfied until the first Bribery Act case is in a court room and who express disappointment at the lack of SFO action to date.  This is naive.  The reality is that in the UK (just like the US) it takes a while to put together a prosecution for a serious bribery case.

OK they say where are the raids by the SFO on executives and corporations suspected of bribery violations?  Again, this is too simplistic.  Its takes a while to gather the facts to merit raids and arrests.

The fact is that just like the US (where some of the principal critics are sat and I’m not naming names…*ahem* Howard…) investigations into bribery law violations are carried out behind the scenes.  In the US the first that many hear of it is in the public filings of SEC reporting companies on the receiving end of letters of request or subpoenas from US enforcement agencies.  Raids?  Not so much.

The recent FCPA centrepiece Shot Show case based on a sting operation about the illegal supply of arms and defence products recently blew up in the DOJ’s face, not the other way around.

So, like a swan while not much may appear to be happening on the surface, under the water there is plenty happening.

The recent quote of the SFO Director relates to the use of the SFO’s statutory powers under Section 2 of the Criminal Justice Act 1987. Historically these so-called ‘Section 2 Notices’ could only be issued after the SFO had accepted a case for investigation. However, in 2008 the law was amended to enable them to be issued at a ‘pre-investigation’ stage in bribery cases.

We wrote in more detail about the Section 2 powers here last summer.

Section 2 in a nutshell

As the SFO say:

“Section 2 of the CJA 1987 gives the Director or a designated member of staff the power to require a person or entity to provide information to us for the purpose of an investigation.  This takes the form of interviewing people, requiring them to produce material or searching premises…

…Written notice is always given when exercising this power.  Notices are typically issued to individuals, banks, financial institutions, accountants and other professionals, most of whom will have a duty of confidence to their clients. Issuing them with Section 2 Notices obliges them to lawfully provide the information that we require.

Where a person or entity does not comply with a notice, or when someone is interviewed and is found to have given false or misleading information, they can be prosecuted.”

TIP: What to do if you receive a Section 2 Notice

In view of the penalty for failure to comply if you receive a Section 2 notice you should take legal advice as soon as possible (and we’ll toot our horn at this point…).

Your adviser should tell you what you need to do to comply with the notice and liaise with the SFO to the extent that its scope needs to be clarified and the practicalities of supplying the relevant information, including timescale.

The chances are that recipient(s) of a Section 2 Notice will not themselves be the suspect(s) (although this is not guaranteed) but anyone on the receiving end will wish to avoid commiting an offence by leaving themselves open to charges that they failed to properly comply with the notice.

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